Retailers react to Amazon Australia’s new liquor store

11 June, 2020 by Deborah Jackson

Amazon Australia’s newly launched alcohol delivery service has garnered mixed feedback from independent liquor retailers – many of which were quick to point out an apparent supply chain issue being faced by the e-commerce giant.

The general feedback from retailers has been varied. Some have raised disappointment in the suppliers that are supporting Amazon Australia. Others have raised questions around the viability of Amazon’s business model in Australia. But overall there is a sense that independent retailers are stronger than ever and are well prepared to take on the new competition.

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Corey Leeson, the General Manager of Independent Liquor Retailers (ILR) told National Liquor News that it “feels like a kick in the guts”.

“I had a look today and suppliers are blatantly using this service to bypass retailers. It is not the first one we have seen but this is certainly the most high profile and you can see the suppliers who are supporting this platform.

“Like the independents don’t have enough competition without suppliers cutting retailers out and going direct to consumers. We have supported and grown their brands through traditional, quality retail and they now feel they can bypass us to save a few dollars. Anyway independents have resilience and there are lots of alternative products we can provide our customers,” he says.

And while Leeson doesn’t specifically call out any suppliers, other retailers that National Liquor News has spoken to that didn’t wish to be named, have said they believe CUB and BoozeBud to be Amazon Australia’s main suppliers.

National Liquor News reached out to Amazon Australia about their supply chain, and a spokesperson responded, saying: “We’re excited to launch the new Wine, Beer and Spirits store on Amazon.com.au with a range comprised of products sold by both Amazon Australia and via third party sellers, suitable for any occasion.

“More than 50 per cent of our sales globally are from third party sellers who represent a key part of delivering a great customer experience.

“Our strategy is simply to offer customers choice in how they shop, with the convenience, range and value that Amazon.com.au is known for.”

Paul Esposito, the CEO of Independent Liquor Group (ILG) told National Liquor News that he doesn’t believe the Amazon model will work in Australia.

“They obviously don’t have a firm supply chain,” he says. “It’s not surprising and I don’t think they fully understand the model in Australia if they think that they could have the same success as in the US and UK.”

Peter Peck, the CEO of Liquor Stores Association of Western Australia (LSA WA) echoes this sentiment and says, “It’s just another hurdle Australian small family businesses will have to try to get over”.

He says: “The challenge to our members and others in this targeted retail space is we have to engage better and be smarter than Amazon and all the other apex predators. We need to keep building on our points of difference.

“Large global organisations are like ocean going super tankers, they take valuable time to alter course, to adapt to any changing conditions.

“The advantage we have as small businesses is the ability to be fast and agile like a jet ski.

“Now more than ever is the time to engage with customers and learn what they want and then devise a business plan on how to deliver that to them.

“The internet will keep growing and evolving. Don’t think you can ignore it because it will get to a point that it will be too late to act. Online is a challenge – it’s only a threat if you ignore it.”

E-commerce has been a huge area of focus for liquor retailers in recent times, with COVID-19 restrictions giving many banner groups, including ILG and Liquor Legends, a boost to fast track the rollout of their new digital platforms.

It’s because of this that Liquor Legends Managing Director, John Carmody says, “As a business, we are not stressed or surprised about Amazon’s new venture”.

“Liquor Legends has a tailored and cost effective solution which benefits and exposes our retailers and supplier portfolios. Our CRM rewards database, AI, Liquid Stock Control Systems, combined with our new digital marketing plan is our recipe for success.

“Our omni-channel approach to e-commerce allows us to be hyper targeted in every decision we make. Thankfully, our platform has been up and running for over two months now and continues to grow and exceed expectations. Our fully integrated digital commerce strategy has now reached over 1.19 million people on Facebook and Instagram and over 456,812 via YouTube combined with our Search Engine Marketing implementation plan. Our digital strategy is only 60 per cent complete, which means the best is yet to come.

“Our national strategy is a phased funnel approach moving new audiences from brand discovery through to advocacy. We need to continue to be forward thinking, innovative and industry leading in this space to keep our customers coming back. By understanding the nuances of our consumer’s journey, we can influence them every step of the way. This boosts brand awareness, affinity, and increases our chances of driving sales, again and again.”

Mal Higgs, Co-owner of several independent liquor stores agrees and says that he wouldn’t be focusing on them as competition.

“We, as independent retailers, have learnt to focus more on identifying what our customers are looking for in their shopping experience and then designing our retail offer to suit that – so we have learnt not to focus so much on what our competitor down the road is doing. Many of us are finding that it is this approach that is driving our success.

“This is particularly true of those customers who are buying across a broader range of products and brands in all categories.

“With a bit of focus and planning, we are able to attract and keep those customers by giving them what they want and often pick up more margin at the same time.”

National Liquor News contacted CUB for comment but they did not respond prior to publication.